Protect the Self Employed

FINANCIAL ADVISOR NEWS         Volume 26, February 2009
Text Box: For any working individual, the greatest asset they have is the ability to generate an income. However the majority of us are severely under-insured and don’t even consider income protection as a necessity. In fact, South Africa is short R10 trillion on life and disability insurance cover¹. If your clients were incapacitated from an accident or illness, would they have enough income or savings to survive? Unfortunately, the reality is that whilst their ability to earn an income comes to a halt, their monthly expenses don’t. Each of your clients carry a different risk profile, predominantly based on their occupation. And as such, self employed individuals carry a greater risk of not being able to sustain their income should they become disabled. Reasons for this include: Where the owner is the business and the business is not able to run without the owner present, a plunge in sales and production is unavoidable. The business won’t be able to continue to pay staff salaries and other overhead running costs, should the owner be incapacitated. As a result of the absence of the owner, the business will suffer damage to its reputation and consequently a potential loss in business. Self employed individuals have no sick leave pay often don’t enjoy the benefits of sick leave. Therefore no work equates to no income for these individuals. Consequences of not earning an income for any individual are far reaching. Debt financing and retirement plans are disrupted, insurance policies and living expenses are cut drastically and living standards are compromised. For most South African families, the reality is that if the main earner of the household becomes disabled, the family would have to cut living expenses by half. In addition, for self employed individuals the continuity of their business is questionable. Should you wish to find out more information for your salary earning or self employed clients, please contact our FMI Financial Distribution team on 0860 10 52 08, email sales@fmi.co.za or visit www.fmi.co.za. ¹ www.loa.co.za , Loa Gap Study.

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Text Box: Did you know? In 2008, the average FMI temporary income protection claim lasted 83 days.

FMI Ltd is an Authorised Financial Services Provider FSP 2717